Explain the potential costs of high-powered incentives by considering the case of providing incentives to police officers. Would it be a good idea to pay higher wages to police officers if they make more arrests?
What will be an ideal response?
On the face of it, providing incentives to police officers to make more arrests sounds like a good idea. Motivated by higher wages, police officers are likely to work harder and to increase the number of arrests they make. However, since they earn higher wages simply based on the number of arrests they make, it is entirely possible that a good number of these arrests may not be warranted and would have been made only to earn higher wages.
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What is the relationship between individual demand and market demand?
What will be an ideal response?
Moe has a big exam tomorrow. He considered studying this evening, but decided to hang out with Curly instead. If neither activity involves any explicit costs, and Moe always chooses rationally, it must be true that:
A. Moe gets less benefit from spending time with Curly than from studying. B. Moe gets more benefit from spending time with Curly than from studying. C. the opportunity cost of studying is greater than the value Moe gets from spending time with Curly. D. the opportunity cost of studying is less than the value Moe gets from spending time with Curly.
The effect of a one-unit increase in expenditure on equilibrium output is determined by
A. the expenditure multiplier. B. Okun's law. C. average labor productivity. D. the average propensity to consume.
If the government imposes a price ceiling below the market equilibrium price, which of the following will result?
A. There will be a surplus of the good. B. The quantity demanded will exceed the quantity supplied. C. The quantity supplied will exceed the quantity demanded. D. The demand curve will shift to the left.